Auditors could not verify contents of net capital balance certificate
KARACHI: The apex regulator of the stock market has suspended the registration of Pak Meezan Securities for six months after the Karachi-based brokerage house submitted a false document and misleading information.
In an order passed by a director of the Securities and Exchange Commission of Pakistan (SECP), the registration of Pak Meezan Securities as a broker of the Karachi Stock Exchange (KSE) was suspended until December 31 for failing to act with due skill, care and diligence in the conduct of business.
The brokerage house submitted its net capital balance (NCB) certificate for the renewal of its registration as a KSE broker last year. The certificate was issued and signed by auditors, Mushtaq and Company Chartered Accountants.
However, the auditors could not verify the contents of the certificate when the SECP asked them if it was authentic, thus proving that the NCB certificate was fabricated.
Read: Ncb verification: SECP suspends two brokers
On further inquiry, the CEO of the brokerage house told the SECP that the employee who was “deputed for this assignment” had now left the job and that the company was “investigating the matter”.
Pak Meezan Securities has been a member of the KSE and Islamabad Stock Exchange since 2004. According to its CEO, the brokerage house has curtailed its business to the extent of ‘proprietary trading’ since 2008. The core business of the owner is shipbreaking, which is based in Gadani with the name of Meezan Shipbreaking Company.
The SECP director stated the NCB certificate was enclosed as part of the company’s application for the renewal of registration and was duly signed by its CEO.
“After a detailed and thorough perusal of the facts, evidence/information available on record, it is evident that the NCB certificate submitted by the respondent (Pak Meezan Securities) to the SECP was not issued by the auditor,” he wrote in his decision.
Read: SECP’s directive: KASB Securities’ trading activity suspended
He noted that the justification provided by Pak Meezan Securities that one of its former employees was involved in the submission of the false NCB certificate has no merit. This shows the respondent has very weak controls and no proper systems and procedures are in place, he stated.
Published in The Express Tribune, July 7th, 2015.
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